In Reply to: Sticky Wages posted by Alexandra Polly on November 11, 2001 at 21:17:12:
The FDIC can only cover so much money, so if everyone with NCUA or FDIC insurance demands their money, the banks will have to start calling in loans, which means if people can't pay, banks will repossess. I think thats what its so important for people to have a positive feeling about spending. When the fed lowers rates, people feel better about buying things because they are less expensive (from lower interest) and that deters people from taking their money out. A bank won't lend to a person who has no tangible assests that they can't seize if they need too. Its the same with unemployment insurance, the person still has some sort of income, so they will not cut back on their spending so dramatically. The programs do help, but ultimately it is the mentality of the person that turns the situation around.
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